Tech Digest⚡ ~ why could LatAm be a hotbed for gaming companies?
4 ~ and a few other things too
Hello hellooo, fellow readers! Welcome to the fourth edition of Tech Digest! Lately, I've stumbled upon some insights about the booming gaming scene in Latin America. It's quite cool to see how the region is becoming a hotbed of opportunities for gaming companies. So today we're going to dive into the topic and explore why Latin America has emerged as a promising hub for the gaming industry. (PS: I'm not a gamer but this is definitely an industry that I like to keep an eye on) 🎮
Remember, sharing is caring! If you know someone who would love to join our tech-crazed community focused in Latin America, spread the word and invite them.💫
Let's dig in! 👾
~ Time to start digesting… 🍩
First and foremost, I'll leave a couple of key takeways before exploring the topic.
// Key takeways
Talent is key. And Latin America is booming with mature talent from other gaming schools.
Gaming companies are born global, generating revenue in dollar. Having talented employees in Latin america leads to a positive cashflow arbitrage.
Language plays an important role. LatAm is favored by having only two languages that are similiar to one another: Portuguese and Spanish. And this is bold for growth.
When it comes to games, community is essential. And latin americans have a culture that favors that, specially through influencers.
The region is booming with young population which favors the gaming industry.
Region is fueled with internet connection, creating a fertile environment for gamers.
// Talent is key and mature talent is a golden
The gaming industry in LatAm has witnessed the emergence of several companies that have successfully operated for over a decade. Significant exits within the Latin American gaming industry not only highlight its growth and potential, but also graduate a new wave of mature professionals.
For example, Wanaco Games, a Chilean studio, was acquired by Behaviour, a prominent Canadian developer. Aquiris, a renowned Brazilian studio, gained attention with its exit to Epic Games. Not to mention some other companies that have not exited but are a talent pool nursery for future founders, such as Tapp, Prota and Gazeus.
Also, akin to the “Rappi Mafia”, Wildlife has also fostered talent over the past decade, leading to a new wave of founders focused on the gaming industry. These employees’ prolonged exposure to the industry equips them with a deep understanding of market dynamics, growth hacking strategies, technical skills, and creative vision, paving the way for new founders of future gaming startups throughout Latin America.
Moreover, the global nature of gaming companies presents a favorable scenario in Latin America. Being born global, these companies generate revenue primarily in dollars or other strong currencies, while talented individuals in Latin America are typically paid in their respective local currencies. This creates a beneficial exchange rate situation, allowing gaming companies to leverage a favorable currency arbitrage. It enables them to maximize their resources, potentially reinvest profits into further growth and development, and enhance their competitive edge and financial viability in the region.
// Growth opportunities
Growth opportunity can be segmented in two parts: i. language opportunity, ii. community building
Firstly, the region's linguistic diversity is a notable advantage. With a large population that primarily speaks Portuguese and Spanish, which are closely related languages, game developers can easily target a vast consumer base with localized content. This linguistic similarity facilitates localization efforts and reduces barriers to entry for game companies looking to expand into multiple Latin American countries.
Secondly, the influence of community and the power of influencers in Latin America cannot be understated. The region boasts a vibrant community of gamers and content creators who hold considerable sway over their audience. Influencers play a crucial role in the success of game launches and marketing campaigns. Notably, in 2022, Gaules, a popular Brazilian streamer, achieved the distinction of being the most-watched esports channel on Twitch, demonstrating the significant influence and reach of Latin American influencers. Oh, in case you were wondering, Casimiro is not that far behind.
// Demographic opportunities
LatAm offers abundant demographic opportunities for the gaming industry. We have a young and sizeable population of almost 680 million, including 32.7% aged between 10-29 years old, the region represents a vast market for gaming. I must say I was shocked to read that nearly 50% of the Brazilian population regularly engages in gaming (which is slightly lower than the 60% figure in the US).
Moreover, the number of smartphone owners in LatAm is rapidly increasing, with projections indicating a reach of 690 million by 2024. Additionally, as of January 2023, the region's internet penetration rate stands at approximately 70%. This widespread connectivity has created extensive opportunities for online gaming and e-sports, enabling higher engagement and participation across the region. (Fun fact for those who don't know: Neymar is a legend in e-sports too)
It is important to mention that the majority of revenue in the Latin American gaming industry comes from the mobile segment. This can be attributed to the high cost of consoles, primarily due to restrictive legislation on imports in many Latin American countries. This expensive nature of consoles makes them less accessible to a significant part of the population, leading to a higher demand for mobile gaming alternatives.
These favorable demographic factors have already had a significant impact, creating a gaming scene in Latin America. App Annie reveals that Latin America holds the impressive title of being the second-largest mobile gaming market worldwide, with beloved titles such as "Free Fire" and "Clash Royale" taking center stage in the region. Thanks to the widespread adoption of smartphones, gaming has become a chill pastime accessible to a diverse population (ie, my grandma is a heavy candy crush gamer, and I bet yours is too). This accessibility has not only fueled the industry's growth but has also unlocked immense potential for the gaming industry in LatAm.
// Taking one extra step…
While the gaming industry in LatAm offers numerous opportunities, it is important to acknowledge the presence of some hurdles. One notable challenge is the relatively low English proficiency among the population, which poses difficulties in recruiting engineers fluent in such language. For instance, in Brazil, only 6% of the population speaks English. This creates a limitation in the talent pool for the gaming industry, as proficiency in English is crucial for global game launches and collaboration with diverse teams from different nationalities.
Also, despite having a large number of gamers, such as Brazil ranking 5th in the global gaming ranking, Latin America as a region tends to rank relatively lower in terms of revenue compared to other regions. For instance, Brazil ranks 10th in terms of gaming revenue worldwide. This disparity can be attributed to a number of factors, including macroeconomic tendencies, monetization strategies that may not align with regional preferences (imagine not accepting PIX or boleto) and variations in purchasing power across the region. Therefore, it is crucial to address these factors and develop monetization approaches that are specifically tailored to the Latin American market.
All in all, I remain bullish about the gaming industry in LatAm. We are witnessing world-class founders stepping up to the challenge and establishing great gaming companies in our region (Falco, Jungle, Supercompany … to name a few). While the hurdles are evident, we should have confidence in our local talent to further explore the opportunities in our region.
🔗 sources: NewZoo Report, Game Education, Statisa, Data Portal, App Annie
🔗 & few of my other tech-related reads of the week...
~ & maybe a few other things…🎨
Again, as you all know, I like to end things with a non-tech topic...
So, let's take a moment to bridge the worlds of games and art, where technology and creativity often intersect in both worlds. In this spirit, I'd like to share a fascinating story that brings together an artist who seamlessly blended art and science in his work. Sit back and let's delve into Rapahel.
// School of Athens - Raphael
Raphael's masterpiece, "The School of Athens," holds a place of honor within the Vatican (and a place of honor in my heart too), and its significance lies in the theme of the perfect harmony between knowledge and philosophy, truly embodying the spirit of the Renaissance.
There are two central figures in "The School of Athens" that often draw attention. In the center, we see Plato and Aristotle engaged in a conversation. Plato is portrayed pointing upwards to the heavens, symbolizing his focus on ideal forms and abstract concepts, while Aristotle gestures horizontally, representing his emphasis on empirical observation and the physical world. Their presence symbolizes the perfect balance between philosophy and knowledge.
Raphael also included over fifty identifiable figures in the painting, each representing a significant philosopher, mathematician, scientist, or artist. These figures include Pythagoras, Euclid, Diogenes, Heraclitus, and even Raphael himself, who included his self-portrait among the gathering of intellectuals. The inclusion of these figures highlights the universal nature of knowledge and the interconnectedness of disciplines.
The blend of art and sciences in "The School of Athens" captures my utmost admiration for the fusion of these two topics. It showcases how artistic expression coexists with intellectual pursuits, creating a bridge between creative imagination and rational thinking. And you know what? It even vibes with our previous theme of games. 🙃
~ & that's all folks… 🥕
I hope you enjoyed this week's Tech Digest. Thank you all & stay tuned for the next edition.⚡
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Bisous,
Isabela Mac ⚡